On December 6, 2021, OIG issued an advisory opinion (Advisory Opinion No. 21-19) to a pharmaceutical manufacturer regarding its arrangement to provide free eye drops to patients who are prescribed one of the manufacturer’s drugs (the Product) which is known to cause keratopathy (changes to the corneal surface) as a side effect of treatment. OIG found the arrangement poses a low risk of fraud and abuse under the federal Anti-Kickback Statute and does not trigger sanctions under the Beneficiary Inducements CMP.
The Product, which has been approved by the FDA, causes roughly 70% of its users to develop keratopathy. The FDA-approved literature for the Product recommends use of preservative-free lubricant eye drops at least four times per day to reduce the risk of developing this potential side effect. The eye drops are non-prescription, cost up to $17 per month, and are not typically reimbursed by federal health care programs.
The pharmaceutical manufacturer offers the eye drops for free to certain eligible patients. The physician or the eligible patient may submit an application to a third-party vendor which is not a health care provider, practitioner, or supplier. The eligible patient interacts exclusively with the vendor regarding the eye drop shipments and receives a supply of the eye drops.
The federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a federal health care program. The Civil Money Penalties Law (42 U.S.C. § 1320a-7a) provides for the imposition of penalties against a person offering or transferring remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary to receive any item or service reimbursed under those programs from a particular provider, practitioner, or supplier (the Beneficiary Inducements CMP).
The concluded that providing the free eye drops poses a low risk of fraud and abuse even though it constitutes “remuneration” under the federal Anti-Kickback Statute. In reaching its conclusion, OIG noted that the Product label, medical guide, and Risk Evaluation and Mitigation Strategy guide recommend the use of the eye drops to mitigate the risk of keratopathy, which is a very common negative side effect of the Product. OIG further observed that the eye drops do not cost a lot of money, are non-prescription, and receiving them for free will likely not lead to overutilization or inappropriate utilization of the Product. Additionally, OIG explained the eye drops will not increase federal program costs because the eye drops are not reimbursed by federal health care programs. Finally, the free eye drops present a low risk of other forms of fraud and abuse typically considered under the federal Anti-Kickback Statute, such as corrupt medical decision-making, since prescribers do not financially benefit from the Product.
OIG also determined that neither the pharmaceutical manufacturer nor the vendor supplying the eye drops is a provider, practitioner, or supplier of health care items or services within the meaning of the Beneficiary Inducements CMP. Enrollment documents for the program make clear to the patient that the free eye drops program is sponsored by the pharmaceutical manufacturer, and not the prescriber. Under the program, all patients (including federal health care beneficiaries) are eligible to receive the free eye drops regardless of which physician prescribed the manufacturer’s Product. Based on these facts, OIG concluded that the free eye drops offered by the pharmaceutical manufacturer will likely not influence a beneficiary to select a particular provider, practitioner, or supplier.
OIG Advisory Opinion No. 21-19 is available here.
